HMRC Business Entity Tests scrapped, but what follows?

Responding to news that the HMRC ‘Business Entity Tests’ for the tax rules known as IR35 are to be scrapped, Theresa Mimnagh, of the compliance and recruitment law specialist Lawspeed, said “the test was always surprising as it looked at the contractor’s business rather than the relationship with the hirer, and IR35 is a tax that is based on the quasi-employment relationship with the hirer.  We hope that new guidance will help simplify the understanding of contractors so that further confusion is avoided.  However, HMRC is likely to use new guidance as another opportunity to explain the law in order to more easily identify those contractors who are caught by the rules.”

Lawspeed is the legal adviser to the Association of Recruitment Consultancies (ARC) which commented “we are keen to see simplification of the law and guidance in a number of areas, IR35 being just one.  Our recent discussions with government representatives following the ongoing review into employment related issues indicates that the government recognises the value in simplification and we welcome all steps it ultimately takes in that direction”.  ARC is also pressing the government to simplify rights for agency workers so that the existing confusion as to whether they can also have employment rights against a hirer is cleared up.

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